"If we don't adapt, we will disappear"

When José R. Sánchez first walked through the doors of Norwegian American Hospital in 2010, the safety-net hospital was struggling on numerous fronts — financially, in terms of quality and with community and physician engagement.

Mr. Sánchez, president and CEO of the hospital in Chicago's Humboldt Park neighborhood, led Norwegian American Hospital through a through a remarkable turnaround. With its finances now in the black, impressive quality scores, an implemented EMR system and a strong presence in the community, the hospital had made great strides.

However, like all safety-nets, Norwegian American Hospital still faces its share of challenges. Mr. Sánchez took the time to discuss some of these with us.

Note: Responses have been lightly edited for length and clarity.

Question: What are some of the main challenges Norwegian American faces right now? What are some of the hospital's biggest sources of pressure?

José R. Sánchez: The challenges we face are the new expectations that are part of the transformation of healthcare in the country, such as reducing costs, improving quality and population health management. Population health management is one of our major issues because it addresses the social determinants of health — job opportunities, vocational skills, decent housing and safety in the community, to name a few. All of these quality-of-life issues or social issues affect the health of the people that reside here. If you take the population of the east side of the city and compare it to Humboldt Park, it's two different worlds. Population health is more of a challenge here in Humboldt Park than in the east part of the city.

Physician relationships continue to be a major challenge because many doctors are here voluntarily since we can't afford to hire them. We don't have the dollars to employ 10 physicians. This component of our business continues to be critical because we need to attract more physicians as part of our network.

Q: What challenges are unique to Illinois safety-net hospitals in the face of the state's massive budget problems?

JS: Seventy-five percent of [our hospital] revenues and funds come from public assistance programs — Medicare and Medicaid — and the fact that we do not have a budget at the state level right now creates uncertainty. However, I'm much more worried about what will happen when a [budget] agreement is made than where we are currently.

Whether we will cut any programs or services has not yet been decided. Certainly, we will continue to provide care to the community. When it gets to the level that we feel there is a threat to our basic services, I will bring that to the attention of those who have been responsible to help us find the funds that we need, but we're not there yet.

Q: What are some of Norwegian American's greatest strengths?

JS: We have been fortunate enough to be able to really gain a new level of efficiency by [right-sizing] the organization through reducing costs and becoming much more efficient in everything we do. This has been helpful in reducing the potential financial deficit we may incur.

Many safety-net hospitals are at the same level. In 2010, we didn't have an EMR in place. Now we have met all of the requirements for meaningful use and we have almost everything online.

We have dedicated significant financial resources to a robust quality department that has helped us meet all state and federal clinical indicators. This also helps us reduce medical errors and provide better patient experiences. We've done very well in this area. 

Q: How prevalent are retail clinics in the Humboldt Park area?

JS: There are no retail clinics in Humboldt Park to my knowledge.

Q: Could retail clinics be a competitive threat to hospitals?

JS: It depends. Retail clinics are for patients that don't have many complications. They could certainly provide treatment and give screenings, but the majority of the population that comes to the hospital come because they are very sick, they've had an accident or a fall or are in significant pain. These people would certainly continue to come to the hospital because we have all of the specialty and diagnostic equipment retail clinics don't have.

Will retail clinics compete with hospitals on the outpatient side? Absolutely. They have some advantages. Many [retail clinics] are open 24/7. They're convenient to people — people can go to Walgreens or CVS to shop, and while they're there they can check their blood pressure or get medicine. The retail clinics are more affordable than coming into a hospital, simply because our cost structure is much higher. However, factor in the cost of higher quality healthcare compared to [that of] a freestanding store, which also makes money in other businesses. Our sole business is healthcare. Hospitals are costly because we provide a higher level of care.

Today's healthcare is all about collaboration and coordination of services. I would certainly love to develop a relationship with a retail clinic so we can give comprehensive treatment to the patients that go to them for screenings or other services. If we are really focusing on population health, these are the kinds of approaches that make a real difference. We need to align with all providers to make a real difference.

Q: What do you see as the three top challenges for your hospital over the next five years?

JS: First and foremost, it is how quickly we can adopt to the ongoing changes taking place in healthcare. For instance, we put together an accountable care entity with 10 providers and we signed a contract with the state. Then the state said we need to become an HMO. Well, this was not the idea. We wanted to be a provider group to provide the best care for the population that would be assigned to us. We never envisioned becoming an HMO before.

Ultimately, MyCare Chicago — our ACE — complied with the new state requirement to become an HMO by partnering with [Long Beach, Calif.-based] Molina Healthcare, Inc., a national managed care organization looking to expand its presence into Cook County. Doing so allowed MyCare to meet all the state funding and capital requirements for an HMO without raising the capital necessary to do so ourselves. We subsequently signed an agreement with Molina to continue to operate MyCare, so we will have met our goal of offering a provider-led option for Medicaid HMO enrollees.

The biggest threat to us is the ongoing change in policy, and if we don't adapt quickly enough, we will disappear.

Second, quality has to be at the top. We will always put the patients in the center.

Third, we need to become a very lean organization. To be able to compete, our cost structure has to be different than the one we have today. To be sure, there is a role for safety-net hospitals in communities like Humboldt Park.

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